What is Economic Analysis?
Economic analysis is also referred to as social cost benefit analysis and is concerned with evaluating a project from the larger social point of view. In such a judgment the focus is on the social costs and benefits of a project which may usually be different from its economic costs and benefits. The questions sought to be answered in social benefit analysis are the following
- What are the direct economic benefits and costs of the project measured in terms of efficiency prices and not in terms of market prices?
- What would be the impact of the project on the allocation of income in the society?
- What would be the outcome of the project on the level of savings and investment in the society?
- What would be the involvement of the project towards the achievement of certain merit wants like self-sufficiency, employment, and social order?
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